Mining & Quarrying leads Q4 2022 GDP growth
The government owned statistics entity, Statistics Botswana this week released figures showing that the mining & quarrying sector remained the major contributor to Botswana’ Gross Domestic Product (GDP) during the fourth quarter of 2022 (Q4 2022).
According to the figures the nominal GDP for the fourth quarter of 2022 was P65, 005.0 million compared to P63, 052.7 million registered during the previous quarter and this represents a quarterly increase of 3.1 percent in nominal terms between the two periods.
The figures show that during the quarter under review, mining & quarrying became the major contributor to GDP by 19.6 percent, followed by public administration and defense at 15.4 percent.
The increase in the real value added by mining and quarrying was mainly influenced by the increase in diamond and copper production. Statistics Botswana noted that diamond traders recorded a high growth rate of 24.4 percent during the quarter under review and added that the positive growth came as a result of favorable diamond prices from global markets.
Copper in Concentrates production increased by 158.2 percent (6,868 tonnes) from 4,225 tonnes during the fourth quarter of 2021 to 10, 911 tonnes during the period under review. The quarter-on-quarter analysis also shows that production increased by 15.6 percent (1,473 tonnes) during the fourth quarter of 2022 compared with 9, 438 tonnes produced during the third quarter of 2022. “The increase was mainly attributed to the availability of efficient machinery coupled with strong demand for the commodity in the international market.â€
According to the figures the increase in the real value added of mining and quarrying was also influenced by silver and coal production which recorded a positive growth during the fourth of 2022. Silver production increased by 174.3 percent (6, 321 kilograms) from 3, 626 kilograms during the fourth quarter of 2021 to 9, 947 kilograms during the period under review. The quarter-on-quarter analysis shows that production increased by 16.9 percent (1, 440 kilograms) during the fourth quarter of 2022 compared to 8, 507 kilograms produced during the third quarter of 2022. The increase was mainly attributed to the efficiency of the machinery coupled with strong demand for the commodity in the international market, according to Statistics Botswana.
Coal production increased by 38.7 percent (181, 730 tonnes), from 469, 481 tonnes during the fourth quarter of 2021, to 651, 211 tonnes in the current quarter (quarter 4 of 2022). On the other hand, quarter-on-quarter comparison shows that coal production decreased by 1.7 percent (11, 051 tonnes) from 662, 262 tonnes during the third quarter of 2022.
The figures indicate that the manufacturing sector also performed well during the fourth quarter of 2022 recording a rise of 5.6 percent in real value added to GDP. “The improved performance in the industry is attributed mainly to the favorable growth in the sub-industry of diamond cutting & polishing by 23.6 percent. The exports of polished diamonds went up by 63.0 during the quarter under review. Similarly, sub-industries such as the manufacture of other food products, manufacture of chemical, rubber & plastic products and manufacture of dairy products registered positive growths in real value added of 5.7, 5.6 and 4.5 percent respectively.â€
Transport and Storage value added increased by 5.5 percent in the fourth quarter of 2022 and Statistics Botswana noted that the growth of the industry emanates from the favorable growth in real value added of Air Transport which increased by 45.4 percent during the quarter under review as a result of increased passenger movements.
The statistics entity stated that that the human health activities and social work sector also had a positive impact on GDP growth during the fourth quarter of 2022. The sector which includes both public & private health and social work activities such as hospital activities, medical & dental practice activities, and human health activities rose by 5.0 percent in real value added compared to a 2.7 percent increase during the corresponding quarter of 2021.
Information Communications and Technology (ICT) industry which comprises of publishing including motion pictures, and printed matter, radio & television broadcasting, telecommunications services and computer programming & information services activities recorded a good performance. The figures show that the ICT industry recorded a growth of 4.6 percent in real value added to GDP during the fourth quarter of 2022, compared to an increase of 2.1 percent registered in the corresponding quarter of 2021.
Real estate sector which include buying, selling, renting, and operating of self-owned or leased real estate, such as apartment buildings and dwellings, non-residential buildings, including exhibition halls, self-storage facilities, malls, shopping centres registered an improved growth of 4.2 percent.
Accommodation and Food Services real value added increased by 3.3 percent in the fourth quarter of 2022 as opposed to an increase of 2.9 percent registered in the same quarter of the previous year. “The improved performance is largely attributed to an increase of 3.1 percent in real value added of the Accommodation activities sub-industry. The enhanced performance in the Accommodation and Food Services industry emanated from increased demand for leisure and conferencing activities post COVID-19 pandemic.â€
The Construction industry value added went up by 3.1 percent in the fourth quarter of 2022. This industry comprises of buildings construction, civil engineering and specialized construction activities.
Education sector which includes both public and private education activities such as pre-primary & primary education, general secondary education, technical & vocational secondary education, higher education increased by 3.0 percent in real value added while Administrative & Support Services Activities real value added increased by 2.9 percent in the fourth quarter of 2022. “The enhanced performance in the industry is attributed to Other Administrative & Support Services and Travel agents, Tour operators and related activities which increased by 3.4 and 2.4 percent respectively. The growth in the tour operators industry is driven by the increase of international and domestic passenger movements by 45.4 percent witnessed during the quarter under review.â€
According to Statistics Botswana the Professional, Scientific and Technical Activities real value added also increased by 2.9 percent in the fourth quarter of 2022. The sector covers legal activities, accounting, bookkeeping & auditing activities, management consultancy activities, architectural & engineering services, research & experimental development, advertising & marketing, specialized design and photographic activities and veterinary activities.
Arts, Entertainment & Recreation and other services activities like dry cleaners, hairdressing and other beauty treatment, funeral and related activities increased by 2.2 percent in real value added while Finance, Insurance & Pension Funding and the agricultural sector contributed less than 2 percent to GDP growth during the fourth quarter of 2022.
Some local economists have indicated that in 2023 Botswana is expected to record GDP growth amounting to 4.2%, a slowdown from the revised 2022 growth of 6.7%. The slow-down in 2023 is at the back of the expected reduction in diamond trade owing to reduced demand resulting in a 1% and 7% contraction in production and trade respectively, according to the economists. “The contraction is expected as a result of a decline in consumer spending and reduced demand for diamond jewelry owing to pressure on real income.â€
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.